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Musk defends receiving $4.9 billion in government support for Tesla, SolarCity and SpaceX

RT | June 1, 2015

Tesla CEO Elon Musk defended the backing his companies get from state and federal sources as legitimate business practices, blasting a newspaper report about government subsidies as “inexcusable” and inaccurate.

According to the report published by the Los Angeles Times over the weekend, Musk’s companies – Tesla, SolarCity and SpaceX – have received an estimated $4.9 billion in government support in total over the years.

The electric entrepreneur didn’t deny the company gets the incentives, however he went on CNBC’s Power Lunch show on Monday, blasting the report as “incredibly misleading and deceptive to the reader.”

“Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost,” wrote the LA Times, adding that public records show “a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.”

“The article makes it seem as though my company is getting some huge check, which is fundamentally false,” said Musk.

The subsidies have been disclosed in the companies’ filings and public records, but no one has tallied all the various forms of public assistance over time, the paper said. Its estimates of subsidies are based on state and federal records, interviews with local and state officials, credit analysts, and watchdog groups.

According to the LA Times, Tesla Motors has received $2.391 billion in government subsidies, while SolarCity has received $2.516 billion. Space Exploration Technologies (SpaceX), a private company that does not publicly report financial performance, received $20 million in local incentives and rebates for a space launch facility in Texas.

Among the examples cited by the paper was a $750 million solar panel factory in Buffalo, New York, which Musk’s SolarCity leased for $1 a year. The company will also not pay property taxes for a decade, amounting to $260 million in savings.

Tesla is getting $1.3 million from Nevada to build a battery factory near Reno, and has received more than $517 million from other automakers by selling environmental credits, known as carbon offsets.

Though after ten years in business Tesla and SolarCity still operate at a net loss, the stocks of both companies are riding high on future potential, the LA Times reported. … Full article

June 1, 2015 Posted by | Corruption | , , , , , , , | Leave a comment

US State Department ignorant on oil industry interests, threatens investors

Press TV – May 5, 2015

The US State Department says it cannot confirm a report that an American oil delegation plans to visit Tehran within the next few days to discuss business.

State Department spokesman Jeff Rathke told reporters at a daily press briefing that it is difficult to verify the report since “not a single individual or company is identified” in it.

Rathke was reacting to an announcement by Abbas Sheri Moqadam, Iran’s deputy petroleum minister, that a US oil delegation is scheduled to travel to Tehran this week “to hold talks with a number of Iranian petroleum ministry officials as well as oil industry contractors.”

Rathke said he wouldn’t “speculate about a visit” which “has not even been confirmed and the nature of which is completely obscure right now.”

“It’s hard to verify whether these reports are accurate at all,” he said, “but also we’ve been quite clear that we don’t consider Iran to be open for business yet, and that if there is any sanctionable activity happening, then we will take action.”

Sheri Moqadam, who heads Iran’s National Petrochemical Company (NPC), had been quoted by the country’s Mehr News Agency as saying that “oil dealers and investors from the US are scheduled to have a business tour of Iranian oil industry and meet with Iranian authorities.”

In response to a question about legal restrictions for American companies in Iran, he had explained that to invest in Iran, companies are required to “register an Iranian company and as a result there is no boundary for foreigners to invest in Iran.”

“It is predicted that following the visit by the American delegation to Tehran and possible removal of sanctions against the oil industry, we will witness the presence of major international US oil and gas companies in Iran in future,” Sheri Moqadam added.

Washington has imposed a series of draconian sanctions on Iran that prevent American firms from trading with Iran and investing in its oil sector projects.

Some of the sanctions are expected to be removed if Iran and the P5+1 reach a final agreement over the country’s nuclear energy activities. The agreement has a deadline of June 30th and its fate is still not clear. However, global traders are already looking into the prospects of investing in the Iranian market.

Tehran has been hosting major trade delegations from Europe and Asia over the past few weeks. A surprise visit by an American trade team made headlines in Tehran last month in what many believed was a sign that the taboo over the presence of US companies in the country was already breaking.

The delegation was comprised of 22 US entrepreneurs, investors and consultants who were reportedly visiting the country to study post-sanctions investment potentials.

Sheri Moqadam, in another report by Shana news agency affiliated with the Ministry of Petroleum, has been quoted as referring to the visit by the same American trade team in Tehran. This, he said, could be the start of the presence of companies from the US in Iran’s 20th International Oil, Gas, Refining and Petrochemical Exhibition – the Oil Show.

“The presence of expert and experienced staff at the Ministry of Foreign Affairs have given us the confidence to be optimistic about the participation of foreign companies in this year’s Oil Show,” the official has told Shana.

The Show will open in Tehran on May 6 and will continue until May 9. Iranian officials have already told the media that a large number of national and international companies operating in various areas down the oil chain will participate in this year’s exhibition.

May 5, 2015 Posted by | Economics, Wars for Israel | , , | Leave a comment

China to build $2bn Iran-Pakistan pipeline – media

RT | April 9, 2015

China will reportedly finance the so-called ‘Peace Pipeline’ natural gas pipeline from Iran, home to the world’s second largest reserves, to energy-deprived Pakistan. The project was delayed due to US dissent.

The final deal is to be signed during the long-sought visit of Chinese President Xi Jinping to Islamabad in April, the Wall Street Journal reported on Thursday.

“We’re building it. The process has started,” Pakistani Petroleum Minister Shahid Khaqan Abbasi told the WSJ.

First proposed over 20 years ago, the 1045 mile (1682km) pipeline will transfer gas from Iran’s south to the Pakistani cities of Gwadar and Nawabshah. Karachi, the country’s biggest city of 27.3 million, will also be connected via local energy distribution systems already in place.

Iran has said the 560-mile portion that runs to the Pakistan border is already complete, which only leaves $2 billion needed to build the Pakistani stretch.

The project could cost up to $2 billion if a Liquefied Natural Gas port is constructed at Gwadar. Otherwise, the project to complete the Pakistani pipeline will cost between $1.5 billion to $1.8 billion, the WSJ said. Pakistan is in negotiations with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy major China National Petroleum Corporation, to finance 85 percent of the project. Pakistan will pay the rest.

The original plan envisioned the pipeline continuing to India, but Delhi dropped out due to US pressure in 2009, Tehran claims. Pakistan, a country of 199 million people faces intermittent blackouts in major cities, and Iran is looking for a place to export its soon-to-not-be-banned gas.

Iran has 33.7 trillion cubic meters of gas reserves according to the June 2014 BP Statistical Review of World Energy. According to BP estimates, it has the world’s fourth-largest oil reserves at 157 billion barrels.

US-led sanctions against Iran over its nuclear program have stunted Iran’s oil and gas industry.

Iran’s oil exports have dropped from 2.5 million barrels a day in 2011 to about one million barrels in 2014, according to the US Energy Information Administration (EIA). In March, Iran produced 2.85 million barrels of oil per day, according to data from Bloomberg.

April 9, 2015 Posted by | Economics | , , , , | Leave a comment

China-UK nuclear power deal details hidden for ‘national security’

RT | January 15, 2015

The UK government has refused to reveal whether the National Security Council approved or discussed China’s investment in a proposed £24.5 billion nuclear power plant in the UK, Hinkley Point C, citing “national security.”

Despite a BBC Freedom of Information request for information regarding China’s expected 30-40 percent stake in the new nuclear site in southwest England, the government denied further disclosure.

Cabinet Office official Roger Smethurst told the BBC: “There is a general public interest in disclosure of information and I recognize that openness in government may increase public trust in and engagement with the government. There is a definite public interest in members of the public being able to understand decisions taken on investment in critical national infrastructure.”

“I have weighed these public interests against a very strong public interest in safeguarding national security.”

The National Security Council’s job is to review and debate foreign investment projects and then to approve or deny them.

Derek Smith, head of communications for the NSC, told the BBC: “The government has put in place an approach which enables it to assess the risks associated with foreign investment and develop strategies to manage them.”

“The NSC brings together the economic and security arms of the government and is the forum that ultimately balances the risks and opportunities of inward investment decisions.”

In June last year, the government announced the civil nuclear agreement signed by the UK and China, which could be “worth hundreds of millions of pounds to British companies over several years.” This paved the way for Chinese companies to invest in Hinkley Point C.

Energy and Climate Change Secretary Ed Davey said at the time: “China and the UK stand united in our plans for more collaborative working that will help to achieve long lasting energy security in our own countries.”

The plant would be the first overseas venture for the China General Nuclear Power Corp.

Meanwhile, the French nuclear power developer EDF is expected to sign an investment agreement with Chinese partners for the new reactor at Hinkley Point by the end of March, to secure investment for the project.

According to the World Nuclear Association, the UK has 16 operational reactors generating around 18 percent of the country’s electricity. All but one of these will be retired by 2023.

China is reportedly negotiating plans to build four new reactors in Turkey. One-third of the nuclear reactors currently under construction worldwide are in China.

The nuclear plant is not the only UK energy project that China co-finances. The state-owned China General Nuclear Corporation is reportedly prepared to pay £100 million for an 80 percent stake in three UK wind farms.

January 15, 2015 Posted by | Economics | , , , | 1 Comment

Japan to reopen 1st nuclear plant after Fukushima disaster – despite volcano risks

RT | October 28, 2014

A local council has voted to re-open the Sendai Nuclear Power Plant on the outermost western coast of Japan, despite local opposition and meteorologists’ warnings, following tremors in a nearby volcano.

Nineteen out of 26 members of the city council of Satsumasendai approved the reopening that is scheduled to take place from early 2015. Like all of Japan’s 48 functional reactors, Sendai’s 890 MW generators were mothballed in the months following the 2011 earthquake and tsunami.

Satsumasendai, a town of 100,000 people, relies heavily on state subsidies and jobs, which are dependent on the continuing operation of the plant.

But other towns, located within sight of the plant, do not reap the same benefits, yet say they are being exposed to the same risks. A survey conducted by the local Minami-Nippon Shimbun newspaper earlier this year said that overall, 60 percent of those in the region were in favor of Sendai staying shut. In Ichikikushikino, a 30,000-strong community just 5 kilometers away, more than half of the population signed a petition opposing the restart. Fewer than half of the major businesses in the region reported that they backed a reopening, despite potential economic benefits.

Regional governor Yuichiro Ito has waved away the objections, insisting that only the city in which the plant is located is entitled to make the decision.

While most fears have centered around a lack of transparency and inadequate evacuation plans, Sendai is also located near the volcanically active Kirishima mountain range. Mount Ioyama, located just 65 kilometers away from the plant, has been experiencing tremors in recent weeks, prompting the Meteorological Agency to issue a warning. The government’s nuclear agency has dismissed volcanic risks over Sendai’s lifetime as “negligible,” however.


Mount Ioyama (image from

Satsumasendai’s Mayor Hideo Iwakiri welcomed the reopening, but said at the ensuing press conference that it would fall upon the government to ensure a repeat of the accident that damaged Fukushima, an outdated facility subject to loose oversight, is impossible.

September’s decision to initiate the return Japan’s nuclear capacity back online was taken by Prime Minister Shinzo Abe, who endorses nuclear production in the country, but has delegated the controversial call on reopening to local councils. Sendai was chosen after becoming the first plant to officially fulfill the government’s new stricter safety rules. It may also have been picked due to its geographical remoteness, and distance from the 2011 disaster area.

The primary reason for Abe’s nuclear drive been the expense in replacing the lost energy that constituted 30 percent of the country’s consumption, which the government says cost Japan an extra $35 billion last year. Japanese consumers have seen their energy bills climb by 20 percent since the disaster as a result.

But another concern remains the state of the country’s aging nuclear plants, which will cost $12 billion to upgrade. Meanwhile plans to build modern nuclear reactors – which were supposed to be responsible for half of the country’s nuclear power by 2030, according to previous government energy plans – have predictably been shelved in the wake of the disaster.

Fukushima dome removal suspended

The painfully slow and calamitous decommissioning of the Fukushima Daiichi plant, in the northeast of the country, had to be halted yet again Tuesday, after the removal of the temporary dome over the damaged Reactor 1 was interrupted by severe winds.

The canopy needs to be taken off so that the radioactive reactor rods, which have been contaminating the soil and water around the plant, can be placed in storage.

But as workers attempted to lift a section of the plastic dome to decontaminate the air inside, a segment of the cover up to six feet was blown off by a severe gust of wind.

Tokyo Electric Power Company, TEPCO, the operator of the shuttered plant, says that the incident has not impacted radiation levels, and hopes to resume operations as soon as possible.

October 28, 2014 Posted by | Environmentalism, Nuclear Power | , , , | 1 Comment

US diplomat tells Hungary to back EU, criticizes PM Orban over Russia stance

RT | October 24, 2014

A US diplomat visiting Hungary has criticized its PM’s policies towards Russia and stated that he believes Budapest should back the EU in its policy of imposing sanctions on Russia.

On Friday, US Chargé d’Affaires André Goodfriend made the condemnations of Hungarian of Prime Minister Viktor Orban’s policies, particularly in regards to Hungary’s decision to grant Russia a contract to expand the Paks nuclear plant and over its support for the South Stream gas pipeline.

Meanwhile the US denied entry to six Hungarian public officials on Monday in the light of corruption allegations. According to Goodfried, their being banned was related to actions specific to each individual, however, rather than Hungarian politics on the whole.

Goodfried criticized Hungary for how it was veering away from the rule of law which was consolidated after its switch to democracy in 1989 and how it was not a good time to be debating the protection and autonomy of Hungarians in Ukraine.

Orban has been calling for the autonomy of some 200,000 Hungarians who currently reside within Ukrainian borders.

“Particularly with calls for autonomy among Hungarian ethnic nationals in Ukraine… this is not the time to have that discussion,” Goodfriend said.

Hungary should “stand firm with the EU, with EU sanctions” he added and should “understand the sensitivities on the ethnic nationalism question”.

The country has been critical of EU sanctions on Russia. Goodfriend stated that it was not the time for Hungary to “break with its EU partners to criticize so publicly the approach that the partners have taken”.

Hungary, however, is very much dependent on Russian gas supplies and says that the South Stream pipeline would actively aid its energy security.

Earlier in August Orban condemned the EU sanctions against Russia likening them to “shooting oneself in the foot.”

Russia is Hungary’s largest trade partner outside of the EU, with exports worth $3.4 billion in 2013.

October 24, 2014 Posted by | Economics | , , , , | Leave a comment

Russian gas sector should not be sanctioned – EU energy chief

RT | August 28, 2014

Russian gas sector should not be subjected to EU sanctions despite the situation in Ukraine, EU Energy Commissioner Gunther Oettinger said Thursday.

“Gas is not a suitable sector for sanctions, as in this case everyone will lose – Russia, Ukraine and the European Union,” RIA Novosti cites Oettinger as saying.

EU Energy Commissioner insisted on a quick resolution of the gas dispute between Russia and Ukraine.

“We need a solution that prevents an escalation between Ukraine and Russia,” he told German broadcaster ARD. “We need Ukraine as a transit country. Ukraine needs gas in winter. In a long and cold winter, Ukraine will not have enough stored gas of its own.”

He also acknowledged that in case Ukraine is left without gas supplies in winter it may steal Russian transit gas on its way to the West.

According to Oettinger by the end of October the European Union should develop a concept that provides each bloc member with warm homes, financing of infrastructure and maintenance of industry for the period from November to March.

On Friday, Oettinger is expected to meet with Russian Energy Minister Aleksander Novak to discuss future Russian gas deliveries to Europe.

The agenda includes talks about safe transit of Russian gas to Europe via Ukraine, legal and technical aspects of the South Stream project, Gazprom’s access to the full capacity of the OPAL pipeline and issues related to the continuation of the Russia-EU Energy Dialogue, the Russian Energy Ministry said in a statement Monday.

August 28, 2014 Posted by | Economics | , , , , | Leave a comment

‘Ukraine committing economic suicide by thinking to stop gas transit’

RT | August 11, 2014

The Bulgarian government is under enormous pressure from the US to cancel the South Stream project, and so Bulgaria is the place to watch now, Daniel McAdams, executive director of the Ron Paul Institute for Peace and Prosperity think tank, told RT.

On August 8, Ukrainian Prime Minister Yatsenyuk announced that Kiev had prepared a list of 172 Russian citizens and 65 companies, predominantly Russian, to put under sanctions for “sponsoring terrorism, supporting the annexation of Crimea, and violating the territorial integrity of Ukraine.” Proposed sanctions include asset freezes, bans on certain enterprises, bans on privatizing state property, refusing to issue licenses, and a complete or partial ban on gas transit and air flights through its territory. Ukraine’s parliament will vote on the final measures on August 12.

RT: Kiev is expected to vote on the sanctions on August 12. Do you think they’ll go through?

Daniel McAdams: I think given the bellicose nature of Prime Minister Yatsenuk and the reckless manner in which he is governing I would certainly expect them to. What Ukraine is doing is committing economic suicide, and the US itself demanding that the EU applies its own sanctions is demanding that the Europeans commit economic suicide. So it makes no sens,e but I suspect it would probably go through in a short term. Remember that Ukraine is spending 6 million dollars a day on its war against the people in the east of that country. This money is borrowed money, the money it expects to make up for not allowing transfer of gas. They are also expecting the IMF, i.e. the American taxpayers, to pony up.

RT: Who do you think will be hardest hit, should Ukraine impose these sanctions?

DM: I find it ironic that the most bellicose of nations, and I’m thinking particularly of Poland and its Foreign Minister Radosław Sikorski… he is the one who is taking the most pleasure in sticking it to Russia, the average Pole is going to have an awfully bitter winter this year, thanks to Sikorski. Poland has around 90 percent of its gas from Russia, so they will be cut off. The Baltic States are also heavily dependent, they are also particularly bellicose against Russia, so they are cutting their own noses to spite their faces.

RT: Ukraine has already lost Russia’s gas. Is the threat to prevent Europe from getting supplies as well, an act of desperation or a carefully planned move?

DM: You have seen Ukraine escalating the situation continuously from the beginning of this government in Kiev and there has been no one to tell them to put the brakes on. However, what are you seeing now in West European media? I think the panic has started to set in. When Russia first announced sanctions on the food items, there was a panic. The Europeans said: “This is not fair, this is playing politics” just after the day they followed the US demand to apply sanctions. The publisher of the huge German economic journal, Handelsblatt, with a very powerful column, yesterday criticized the German government for its sanctions. You saw on Monday an article in the BBC highlighting all of the companies: Scottish fish exporters, Irish cheese makers who are going to take enormous economic hits in these tit-for-tat sanctions. Energy is not different, the only person that will do it well is ironically the US vice-president ‘s son, Joe Biden’s son, who you know is on the board of one of the largest Ukrainian energy companies, who are selling their line to the Ukrainians to make up for all of this by fracking and other alternative sources, which is just a joke.

RT: Do you think this move could speed up the construction of the currently-frozen South Stream?

DM: On one hand, it’s in its interest [Bulgaria] without question to continue with the South Stream and to have as good relations as it can because it gets almost all of its energy from Russia. However, I can imagine there is enormous pressure from the US. One can only imagine the pressure to cancel the South Stream project. So Bulgaria is the place to watch now.

August 11, 2014 Posted by | Economics | , , , , , | Leave a comment

Hague court had no authority in Yukos case, ruling politicized – Moscow

RT | July 28, 2014

The Hague’s arbitration court was not legally empowered to view the case of Yukos Oil Company v. Russia, and the court’s “one-sided” ruling disregards previous Strasbourg court decisions on the issue, the Russian Finance Ministry said in a statement.

Viewing the case, filed by shareholders of former Russian oil giant Yukos against the Russian government, was not in the jurisdiction of the Permanent Court of Arbitration (PCA) in the Hague, as Russia has not ratified the Energy Charter Treaty, the ministry said on Monday.

The statement, following the court’s sensational Monday ruling that ordered Russia to pay $50 billion in damages, also provided a detailed list of issues, which, according to the ministry, make the decision “opportunistic” and “politically biased.”

First of all, The Hague court ignored the previous decisions of the Strasbourg-based European Court of Human Rights (ECHR), which in September 2011 ruled that the Russian authorities had carried out “legitimate” and not politically motivated actions against Yukos “to counter the company’s tax evasion,” the ministry noted. The ruling contradicted Yukos shareholders’ claims that the company’s assets were purposefully expropriated by Moscow.

The Russian Finance Ministry meanwhile blasted the arbitration ruling as based on “one-sided investigation with one-sided application of evidence.”

The Hague court in effect reviewed the decisions of Russian courts on Yukos “as if the arbitration court was an additional authority for appealing the court orders,” the ministry said. It has made “theoretical speculations not supported by evidence” over the motivation of the Russian authorities’ actions in the case of Yukos, it added.

The international body failed to note that the people who controlled Yukos, including the oil tycoon Mikhail Khodorkovsky released from jail in December, were apparently aware of financial machinations aimed at a mass-scale tax evasion in favor of the company, the ministry stressed. The tax evasion scheme, which involved the creation of numerous bogus companies, was not properly considered in the court.

The arbitration court went as far as to judge “what Russian tax legislation should be like” as opposed to what it required in reality, the ministry said. The court refused to pass several controversial issues on taxes for review by Russian, UK or Cyprus competent authorities despite relying on the Energy Charter Treaty that outlines a need for such reviews, it added.

While in effect saying The Hague court decision was not legally binding for Moscow, the ministry added that “the Russian Federation will challenge the arbitration court’s decisions in the courts of the Netherlands.”

According to the ministry, “the arbitration court failed to approach the adjudication with common sense, which is required from the judges in such situations,” which resulted in an nonobjective and biased decision.

“Such an approach undermines the authority of the Arbitration court and the Energy Charter Treaty, which are being applied in increasingly politicized manner and, as in this case, have become the objects of abuse on behalf of domestic investors trying to evade taxes,” the ministry said.

ECHR is expected to announce a fresh decision on Yukos’ multi-billion dollar claim against Russia on Thursday, as the defunct company’s shareholders have filed a separate application with the Strasbourg court, Reuters reported.

Background: ‘Mega-arbitration’: Court orders Russia to pay $50bn in Yukos case

July 28, 2014 Posted by | Economics | , , , , , , , , | Leave a comment

Russia, Serbia agree €2.1bn South Stream construction deal

RT | July 9, 2014

Serbia has signed a 2.1 billion euro contract with Gazprom subsidiary Centrgaz to construct the South Stream pipeline across its territory. There is increasing pressure from the EU to suspend the project because it claims it breaks competition law.

Centrgaz will be involved in the design, procurement, construction and installation activities, personnel training and commissioning, while Serbian subcontractors will carrying out some of the work, according to South Stream.

The signing ceremony was held in Serbia on Tuesday between South Stream Serbia and Centrgaz.

south_stream_for_serbia_storyGas should be flowing through the Serbian part of the pipeline by the end of 2016, according to RIA Novosti.

There has been mounting pressure from the EU to put the project on hold, as it is seen to breach European law.

Serbia had appeared to have halted the construction process, following Bulgaria’s move, however both countries later denied they were not going forward.

Most of the participating countries have confirmed their commitment to South Stream construction.

On Wednesday Russia and Italy said they would continue work on South Stream and were ready “to settle all of the issues, including those that concern dialog with the European Commission,” according to Russian Foreign Minister Sergey Lavrov.

On Tuesday, Slovenia’s Foreign Minister Karl Erjavec said the country wanted “South Stream to pass through our territory.”

Further support for the Russian-led project came from Bulgaria on Monday, when the Prime Minister Plamen Oresharski said it was one of the country’s priority projects. The comment was made after a meeting with Russian Foreign Minister Sergey Lavrov in Sofia. “I believe that we have enough arguments to continue the project,” Oresharski said, adding that the government will work as hard as it can to continue it within the European legislation.

Russian Prime Minister Dmitry Medvedev said the deal on the Serbian part of South Stream would “… mean the transition of our relations with Serbia to a new phase.”

South Stream is a Gazprom project expected to deliver 63 billion cubic meters of Russian gas annually to Europe bypassing Ukraine, which has proved unreliable as a transit partner. The on land part of South Stream goes through Bulgaria, Serbia, Hungary, Slovenia and Austria.

July 9, 2014 Posted by | Economics | , , , | Leave a comment

Bulgaria halts Russia’s South Stream gas pipeline project

RT | June 8, 2014

Bulgaria’s prime minister, Plamen Oresharski, has ordered a halt to work on Russia’s South Stream pipeline, on the recommendation of the EU. The decision was announced after his talks with US senators.

“At this time there is a request from the European Commission, after which we’ve suspended the current works, I ordered it,” Oresharski told journalists after meeting with John McCain, Chris Murphy and Ron Johnson during their visit to Bulgaria on Sunday. “Further proceedings will be decided after additional consultations with Brussels.”

McCain, commenting on the situation, said that “Bulgaria should solve the South Stream problems in collaboration with European colleagues,” adding that in the current situation they would want “less Russian involvement” in the project.

Russia’s Energy Ministry said it had not yet received any official notification from Bulgaria on work on the project being suspended.

Earlier this week, EU authorities ordered Bulgaria to suspend construction on its link of the pipeline, which is planned to transport Russian natural gas through the Black Sea to Bulgaria and onward to western Europe. Brussels wants the project frozen, pending a decision on whether it violates the EU competition regulations on a single energy market. It believes South Stream does not comply with the rules prohibiting energy producers from also controlling pipeline access.

The EU is also asking for an investigation into how contracts were awarded for work on the pipeline in Bulgaria. Brussels sent the Bulgarian government a letter of formal notice asking for information, to which Sofia had one month to reply.

Russia’s energy giant Gazprom’s South Stream pipeline requires European approvals as its route would pass through the territory of several EU countries.

In Bulgaria, the ruling Socialists support the South Stream project, while Movement for Rights and Freedom leader Lyutvi Mestan told parliament on June 5 that Bulgaria should defend its strategic interests “in cooperation, not in confrontation” with Europe.

Earlier Serbia has said it has no plans to delay the start of construction of its leg of the South Stream pipeline, scheduled for July. Serbian Energy Minister Aleksandar Antic said that the position was not decisive: “I believe the European Commission and member states will find a solution because this is a European project in the best interests of energy security.”

Hungarian Prime Minister Viktor Orban also said June 5 that the pipeline should be built, as there was no alternative to the project.

June 8, 2014 Posted by | Economics, Malthusian Ideology, Phony Scarcity, Nuclear Power | , , , , , , | Leave a comment

Economist Devastates “War for Oil” Dogma

Aletho News

Professor Cyrus Bina relates the facts that the oil industry and markets have been globalized. The various theories that have been put forward from both the left and the right regarding war rationales that rely on demonisation of OPEC are essentially nothing more than outdated fear mongering. Cyrus Bina has been vindicated by more recent events.

Cyrus Bina:

The history of Middle Eastern oil, including its subsequent development into a modern industry, can be divided into three distinct stages: (1) the era of international cartels, 1901-1950; (2) the era of transition, 1950-1972; and (3) the era of globalization since the mid-1970s. A slightly different historical periodization can be provided for the U.S. domestic oil industry: (1) the era of classical cartelization and early oil trusts of 1870-1910; (2) the era of regulated neo-cartelization of 1911-1972; and (3) the era of globalization since the mid-1970s. A close examination of the entire 1870-1970 period would reveal that administrative pricing under the International Oil Cartel (known as Seven Sisters) were predominantly the rule in the oil business. The cartel, however, began to lose its grip during the 1950s and 1960s. Proliferating market forces, in con-junction with the development of capitalist social relations in the colonial and semi-colonial oil regions, had overcome the colonial concessions and worldwide administrative control of oil under the international oil cartel. The oil crisis of 1973-1974 was but the symptom of this transformation toward globalization. Moreover, the so-called “OPEC offensive”—which was misperceived by both the right and the left as the cause for re-control of oil market/prices —was but the catalyst of this de-cartelization and globalization of oil.

The war-for-oil scenario, as a popular myth, ignores the deeper understanding of the complex web of contradictions and regulating dynamics of today’s economy and polity. Yet, the very anachronism of this scenario is understandable in the view of the anachronistic U.S. behavior that is so dreadfully attempting to reverse the loss of American hegemony against the time and, more importantly, history. Therefore, parallel with the anachronistic reality of U.S. colonial conduct in Iraq, the anachronism of the “oil grab” becomes “reality” in the minds of those who chant “No Blood for Oil.” Yet, holding a parallel between the U.S. invasion of Iraq and the control of oil is a far fetched proposition, if not an outright illusion. For, since the mid 1970s, the material bases and dynamics of post-cartelization and globalization of oil render the physical access, prearranged inter-company allocation, and indeed administrative control and pricing of oil redundant. This rather counter intuitive reality also renders any connection between the war and oil—other than given disbursement to finance matters such as the establishment of a puppet government—superfluous.

Nevertheless, in an interview, James Schlesinger remarked: “The United States [Bush, 41st] has gone to war now, and the American people presume this will lead to a secure oil supply. As a society we have made a choice to secure access to oil by military means. The alternative is to become independent to a large degree of that secure access.” It is indeed surprising that a market worshipping Chicago School economist fails to see the formation of (spot) oil prices within interconnected and unified markets since the post-cartelization of oil in the 1970s. Schlesinger, on the one hand, stresses the phrase “secure access” and, on the other hand, underscores the alternative of “independence,” as if one can insulate the U.S. oil industry from the rest of transnational oil. This thesis provides a convenient cover for two separate strategic projects: justifying the war without exposing its real cause, and creating panic by playing the familiar scarcity card to extend the exploration of oil in the pristine U.S. regions of wildlife such as ANWAR. In this context this was also what the Bush administration and Cheney’s “Task Force on Energy” probably had in mind when they were referring to “secure oil.”

In a nutshell, the above thesis ignores (1) the mutuality of oil producers and oil consumer, the need of both sides in selling and purchasing in the competitive global oil market, (2) the interdependence of oil regions in the present interdependent world, (3) the formation of global prices based on the cost of highest cost (U.S.) producer, not the cost of individual oil regions, and (4) the formation of differential oil rents, given the existing differential (regional) costs, through competition. Here, the dramatized “oil dependency” is but an empty phrase in the view of the trans nationalization of oil since the 1970s.

On the opposite side, hardly anyone on the left fully recognized the implication of uncritical acceptance of the above tautological thesis. Thus, the left-wing liberals and the radical left adopted this theory and dressed it up in leftist garb before applying it to either the question of war or the problem of environment. Michael Klare is one of the remarkable defenders of this thesis on the left. He declares: “Two key concerns underlie the Administration’s [Bush, 43rd] thinking: First,the United States is becoming dangerously dependent on imported petroleum to meet its daily energy requirements, and second, Iraq possesses the world’s largest reserves of untapped petroleum after Saudi Arabia.” Klare, however, takes this thesis one step further to an improvised level of neo-Malthusian scarcity:

“Global demand for many key materials is growing at an unsustainable rate. As the human population grows, societies require more of everything (food, water, energy, timber, minerals, fibers, and so on) to satisfy the basic material requirements of their individual members…. Because the production and utilization of these products entails [sic.] the consumption of vast amount of energy, minerals, and other materials, the global requirement for many basic commodities has consistently exceeded the rate of population growth.”

This worn-out neo-Malthusian message has again been reiterated in Blood and Oil. Yet, Klare, who is perplexed by the gravity of U.S. involvement in Iraq is “compelled … to conclude that petroleum is unique among the world’s resources that it has more potential than any of the others to provoke major crises and conflicts in the years ahead.” Again for Klare (and for many on the left) the specificity of the cause-and-effect seems to have no bearing on this historically unique epochal conflict and his fascination with oil is so intensive that he fails to realize a need for a specific and independent analytical proof.

I contend that, at best, the war-for-oil scenario is a text with out a context. On a logical level, the oil scenario is a remarkable example of a post hoc, ergo propter hoc fallacy, misplacing the real cause of U.S. military intervention. Moreover, by neglecting the depth of the last two decades of global transformation, the protagonists on the left and the right both have adopted a very voluntaristic-functionalist view of the U.S. global role. The left tends to capitalize on a voluntaristic interpretation of the concept of hegemony and the functionalist pivot of U.S. military might. For Klare, though, the global conflict “is entirely the product of geology.” The right, on the other hand, tends to rely on the notion of a “unipolar” world and wishful arguments of the “bound to lead” variety, without adequate attention to the emerging new polarities associated with the loss of American hegemony and the forces of globalization.

Others on the left, who are obsessively fond of the war-for-oil scenario, argue that this war may not have been for oil in the interest of U.S. capitalism as a whole, but rather in the interest of “U.S. oil corporations.” Hence, they propose that the cost of war amounts to a huge subsidy by the entire society given to the oil industry. This is a fictitious argument derived from the blind assumption of “direct access” and physical control of oil, and absolute denial of the reality of global transformation of the oil industry in the early 1970s. It is also crude and arbitrary, given the reduction of the material interests of the entire (U.S.) capitalist class to the alleged interests of its tiny fraction. And, appealing to casual observation, such as watching news from the Iraqi oil fields and the arrival of oil service contractors for “rebuilding” Iraq, is not sufficient to turn away from serious analysis. The truth is that this adventurous undertaking is in the interest of neither.

Finally, attaching significance to the switching of the currency, from dollar to euro, by OPEC oil producers is unjustified. As Paul Krugman pointed out in a short note, any possible shift from the dollar to the euro on the part of OPEC will result in a “small change,” for the U.S. economy, much smaller than the switching made already by the “Russian Mafia.” However, many on the left are not losing any opportunity to grasp this straw.

January 9, 2014 Posted by | Deception, Economics, Timeless or most popular | , , , , , | 1 Comment